Matt Christ, Emerging Market Transition Debt Portfolio Manager; Deirdre Cooper, Head of Sustainable Equity; at Ninety One
A sustained oil price shock would have major impacts across the global economy – including on the energy transition. Oil prices have risen sharply since the start of the year, with Brent crude up 58% since the start of the year. More worryingly from a consumer perspective, “No Diesel” signs have started to appear at filling stations from Australia to South Africa. The situation in the Middle East is evolving rapidly, and oil prices are volatile. Even if tensions ease, oil prices are likely to retain a higher geopolitical premium, with supply disruption risks remaining elevated.
Matt Christ, Emerging Market Transition Debt Portfolio Manager: “Periods of energy shock tend to accelerate structural change. This is not just volatility, it is a potential inflection point for electrification, particularly in emerging markets where energy security is critical.”
Clean-tech demand was already accelerating—driven by emerging market adoption and rising power demand from AI. Now, with energy security under heightened threat, we would not be surprised to see oil – and gas- importing countries use additional policy measures to further accelerate the shift away from fossil fuels, by encouraging energy efficiency, electrification and increased renewable energy deployment.
This is particularly true for economies in Asia, which are most at risk from the closure of the Strait of Hormuz: over 80% of the oil and liquefied natural gas shipped through the strait is destined for Asian markets. At the same time, higher oil & gas prices increase the cost advantage of clean technology (such as electric vehicles and renewable power), which is already cost-competitive with fossil-based technology in many regions. This is reinforcing the economic and strategic rationale for reducing dependence on imported hydrocarbons and accelerating electrification.
There is a clear example to follow: China, the world’s first ‘electro-state’. As well as supplying the clean tech that enables other countries to industrialise more cheaply than ever before, China is moving faster than any other nation towards an electrified economy and society. Over 50% of new car sales in China are electric, 10% of the entire vehicle fleet is already electric (International Energy Agency, 2025), and electric vehicles dominate the two-wheeler market. This shift has been driven by cost. China has built vast manufacturing scale and invested in developing technological leadership, making electric vehicles cheaper than internal combustion engine equivalents in Asian economies. Rising petrol and diesel prices only increase that cost benefit and could further accelerate adoption and policy support aimed at improving energy resilience.
Deirdre Cooper, Head of Sustainable Equity: “China has shown how quickly an economy can electrify when the economics make sense. That model is now being replicated across emerging markets, where cost, not policy, is the primary driver of adoption.”
China is in the vanguard, but the economics it has pioneered – falling technology costs and an expanding export base of affordable clean-tech – are taking hold across emerging Asia, Latin America and Africa. Crucially, in emerging markets, the transition is driven by cost and superior technology, not policy, making it more durable. We think this is greatly underappreciated by a market that remains focused on European regulatory cycles and US tax incentives as the primary drivers of decarbonisation investment.
From a public-equity investment perspective, the new energy backdrop accelerates demand across the emerging markets clean-tech value chain we invest in from Chinese electric-vehicle batteries and energy storage enabling more stable renewables generation, to the physical grid infrastructure required to connect new capacity to where it is needed.
Cooper continued: “We see significant opportunities across the clean-tech value chain in emerging markets, from batteries and grid infrastructure to renewable generation. These areas remain underappreciated by global investors, despite strong structural demand.”
A sustained oil shock is likely to bring forward additional policy and the capital commitments needed to increase energy independence in Asian economies, in particular.
“The same dynamics reinforce the case for transition-focused investments in private markets, such as private loans. Our current pipeline includes private loans to fund generation, biofuels, data centres and sustainable real estate across Asia, Latin America, Africa and the Middle East. Sponsors and developers are rapidly moving forward with these transactions. Unlike segments of private credit, where valuations are tied to technology-sector growth expectations, these are senior secured loans backed by real, revenue-generating infrastructure assets. They are insulated from the volatility reshaping other parts of the private credit market, and direct beneficiaries of the increased focus on renewables in light of the oil shock,“ said Christ.
At the total portfolio level, an accelerating emerging markets transition, underpinned by higher oil prices, is creating a set of growth drivers distinct from the Western decarbonisation value chain driven by infrastructure needs, the economics of technology adoption, and rising EM energy demand. As oil and gas supply routes come under pressure, emerging markets opportunities remain wide open.
ENDS
